Wednesday, May 25, 2016

Basic Income Impossibility Theorem

Assume everyone needs $100 a month for room and board. 
Assume a free universal basic income of $100 is implemented.

On the margin, someone will stop working. There will be less wealth. With less stuff bidding for a fixed dollar amount, the price of money will fall. Inflation occurs. Room and board now cost at least $101, and unemployed UBI recipients are now either getting evicted or starving. Notably this only occurs if UBI is national. Having a limited test run won't shift the inflation needle beyond the noise.

Right, so let's start a little higher, yeah? Start at $120. On the margin, someone will stop working. This will cause inflation. Meaning $120 will only buy, say, $115 worth of stuff. This widens the indifference margin between working and not-working, so someone else will stop working. This will cause inflation. Which will widen the not-working margin. Und so weiter. 

(Indeed subsequent rounds of inflation are all but guaranteed to be higher, as a roughly equal mass of stuff is being removed from a smaller pie.)

I've mentioned serfdom before. If the guaranteed income came with some kind of cost, being universal only in availability rather than in concrete application, the damage would in all likelihood be negligible.

Friday, May 13, 2016

Effects of Price Fixing on Labour

Not controversial: price controls are bad.
Minimum wages are price controls on labour. Price controls prevent markets from clearing.

The labour market in particular needs to clear. Labour is literally the only input that every business needs, so labour mispricing affects the entire economy.
Precisely because labour is so critical, the price floor isn't quite as destructive of jobs as it should be. Replacing labour isn't as easy as switching from black pepper to red pepper. However, there's a flip side: in the long term the floor is even more destructive.

When labour supply grows and labour price should fall, the wage-floored economy generally has no spare capacity of inputs it can swap for labour, having already used them up.

Immediately, extra supply a free market could absorb instead goes into unemployment. 
Further, the price of labour does not fall, causing the wage-floor price derangement to propagate all the way up the labour price schedule. All labour is now overpriced, leading to a shortage. More intuitively, the number of jobs bidding for labour drops, causing unemployment across the wage spectrum.

Because there's a shortage of jobs, there's a shortage of wealth creation. Wealth per capita drops, and the price of money drops - we see inflation.

Because poverty is on the rise, politicians promise to fix it by increasing the minimum wage. Because labour is relatively slow to adapt to market conditions, this seems to work for a moment, but in the long term the cycle repeats until we reach full communism except there's no factories, no jobs, and everyone who doesn't physically hold a farm starves to death.

Wednesday, May 11, 2016

Monetary Supply Fundamentals

Macroeconomics can't be done by official economists because it's too easy, not too hard. It's high school at the hardest, meaning can't impress your smart friends with it. I'm about to go from spherical-cow game theory to the business cycle in a couple pages, skipping only the justification of prices(supply, demand). Compare going from quantum chromodynamics to how your liver works - could easily take a million pages.

I welcome corrections, either below or here.
 Inflation is decrease of the price of money.
Deflation is increase in the price of money.

Fundamentally, inflation is caused by decreasing demand for a currency, or increasing supply.
Deflation, by increasing demand or decreasing supply.

The price of future money is always discounted. This discount is usually called 'interest,' but this is misleading. The market interest rate has three non-price factors, the combined effects of future time orientation, future instability, the net expected inflation/deflation rate. Finally, interest includes the supply/demand balance, and therefore price balance, of present money versus future money.

(It's counter-intuitive to think of demand for money in terms of goods rather than the other way around, but doing so has no economic flaws.) 

The market is not clairvoyant. The supply of money it sees is whatever demands goods, not any sort of total supply, meaning savings and debt affect the apparent supply. Saving more money sequesters it, causing deflation. (Essentially, saving creates a velocity discrepancy.) Lending out more money increases the apparent supply, thus causing inflation in addition to altering the present/future supply/demand balance.

Average velocity does not affect the price of money. While greater velocity increases the supply the market sees, it simultaneously increases the demand the market sees. The absolute velocity, $/second, being neutral to supply and demand is the reason any amount of money is enough to run any economy, subject only to being sufficiently divisible. In addition, the relative velocity, %/second, is neutral.

As I understand it, under fractional reserve, consumer banks can deposit physical bank notes at their federal account, and lend out ten times that amount to consumers. Further, they can lend out ~90% of anything deposited with them. Since the amount they poof into existence will get eventually get deposited at a bank in most cases, the math works out such that they can lend out roughly 100 times whatever they deposit with the Fed. (Capital requirements are a different way to the same goal.)

Having written the above, aside from the risk of bank runs, I now realize this has already caused any damage it can. Essentially, the banks own a hundred times as much cash as they 'really' own. While this was doubtless a huge boon to banks at the expense of everyone else, it was a windfall and is now over.

In combination with this, the government frequently backs various securities with the printing press, which the market knows enough to treat as money - however, the market learns about the inflation non-instantly, thus producing an exploitable inflation gradient.

Under non-fixed interest rates, the feedback is negative. Agents know net interest = gross interest - inflation. Inflation caused by increased loaning is countered by lowering interest rates discouraging loans. Inflation caused by decreased saving is countered by the inflation itself filing away loan profit margins. Deflation caused by increased saving is countered by increasing interest rates encouraging loans. Deflation caused by decreased loaning is countered by the deflation itself discouraging loan buyers.

There's a buffering effect from this that absorbs shocks in supplies of goods to a degree. The price of money and level of deflation ends up relatively stable.

Fixed interest rates lead to gluts and shortages, much as any fixed price, to the extent the price differs from the market price. This is annoying, but rarely dangerous.

The dangerous issue arises with artificially low interest rates. It is possible to destroy wealth but make money. If inflation is 20%, and interest rates are 5%, then it is possible to spend the loan on materials that can be sold for 110% of their price, and make enough money to cover the loan and profit. Normally this cash return wouldn't be enough to pay for a full set of new materials, but the revenue demonstration can back a larger loan, and the cycle repeats.

A little over 600 words and we reach the Austrian business cycle. Below-market interest rates destroy wealth until there is no more free-floating wealth to destroy, whereupon even the pretense of production shuts down.

Once the businesses stop existing and thus demanding loans, the money supply contracts, causing deflation. This causation is reversed by official economists, who believe deflation causes economic contraction. They say it's from increased saving, which is plausible, and even true - the banks are saving their 100x poof money. However, it's not by choice, it's from debtors defaulting faster than the banks can find new debtors. Noting the exact same vicious effect happens in hard-money regimes with fixed interest prices.

A shock is easily defined - it's an event that takes the market far from equilibrium. During a banking shock, the amount of goods being made becomes disjunct with wages, causing poverty and oversupplies. Many employees paying money to nondestructive firms lose their jobs, cutting the artery, and the market cannot adjust as quickly as the cuts. Without these oversupplies it's likely the deflation shock would be even more shocking.

Deflation increases the net interest rate, leading to positive feedback. As debts are not rolled over to re-lent out, fewer can afford loans, meaning the money supply contracts further. Normally this would be countered by lowering interest rates, but as the rates are fixed, they can fall neither as fast nor as hard as they need to.

However, even unfixing the interest rates cannot completely solve the problem, as it was caused in the first place by interest rates being too low. Crashes caused by Fed mismanagement cannot be fixed without severe pain, as they require interest rates to go up, to fix the problem, but also to go down, to avoid catastrophic fiscal shocks. Have to shoot yourself in the foot, but you get to pick left foot or right. (Or, past coercion usually can't be resolved without future coercion.)

In practice, we see the Fed reliably chooses to lower interest rates, causing another round of business investment in wealth-destroying activities. In the short term, money is delivered to productive individuals, who can support productive businesses, while in the long term the economy becomes even heavier with parasitic seedcorn-eating businesses. Official economics cannot distinguish between malinvestment causing malproduction, and real wealth increases, because their job is to justify whatever the Fed wanted to do anyway, meaning it's their job to not understand reality.

Freeing interest rates would, in the short term, cause tremendous hardship as technical debt is repaid. In the long term it would prevent economy-wide recessions from occurring, barring innovation in ways to bugger the price system. Sector-specific recessions would still occur, as unexpected drops in necessary production necessarily occur, which in retrospect reveals recent investment as malinvestment.

Sunday, April 17, 2016

Property vs. Parental Rule

My theories of property were explicitly tested against these kinds of situations. I find it interesting to show how twisted up they are, and it's clear following my theories leads to much less twisted lifestyles.

Nevertheless, my mother guarded Soul Blazer with no small amount of jealousy such that for some time nobody played it. I do not begrudge her this, more out of an aversion to the spectacle of a thirty-three year old man being angry about the level of access he had to a video game more than twenty years prior than anything. And beyond that, what grounds would I have? The game was, in point of fact, hers. Any decision to restrict access to it was inherently justifiable, and any objection based on the perceived unfairness of this could reasonably be countered by declaring the exercise a life lesson of some sort.
It does bother me that progressives, immersed in sophism, will mix together separate topics even when they're not trying to beguile you. Less so now I've figured out how to centrifuge them out with some minimum elegance.

Nevertheless, my mother guarded Soul Blazer with no small amount of jealousy such that for some time nobody played it. [...] The game was, in point of fact, hers. Any decision to restrict access to it was inherently justifiable, and any objection based on the perceived unfairness of this could reasonably be countered by declaring the exercise a life lesson of some sort. [...]
What is striking about it in my memory is the inherent pointlessness of it - the fact that there was not actually any productive desire or motivation. Nobody actually wanted the game to sit shrink-wrapped for months.
Of course it's her right. It's rational, but meta-irrational.
Given that his mother did feel this jealousy or equivalent, guarding it was probably satisfying and thus the correct choice in the moment. However, it was a mistake to have let it be a correct decision so far into adulthood.

Basically she thought she needed to demonstrate control. (Or something. It varies.) To prove to herself that she could control her life and thus she would be able to deal with future disasters, and she was likely to lead a life with some minimum amount of satisfaction.

Keeping the shrink-wrap on is fundamentally cargo-cult control. Controlling a thing contested by nobody but a child proves nothing. Controlling the game could not be a means, only an end - her satisfaction was based on an illusion, unless she really loves shrink-wrapped SNES cartridges. It certainly didn't improve her relationship with her children, for example. It was a demonstration of how she was not in control, because the thing she was grasping and manipulating was not reality.

The solution to this is not to abrogate the rules of property. That causes more harm than good. In these cases, a kindly priest might offer some advice from the stool in the confessional, but beyond that there's no way to solve the irrationality but to let the fool continue in their folly till it teaches them otherwise.

Further, formalized property rights would have eased this insecurity. She would stop trying to control things she in fact has no control over, and would be able to take an accurate inventory of things she could control. Moreover, she would have had such an inventory long enough in advance to improve it were it deficient. E.g. she could have put certain housecare or childcare duties as papa Sandifer's in the marriage contract. (Even though she'd likely have got it wrong and ended up trading them away again.)

I do not begrudge her this, more out of an aversion to the spectacle of a thirty-three year old man being angry about the level of access he had to a video game more than twenty years prior than anything.
The child clearly resented it. This was predictable - the parent should have known it would cause resentment. The parent was in control. By combining control and knowledge, they are responsible for causing it. Was it needful? Did this act come from a place of kindness and maturity?

I'm not saying parents need to be perfect all the time. I do say that 'the best they could' appears to mean 'everything they did was always justified,' which is flatly ridiculous.

regarding the Super Nintendo itself, which had been a gift to me as surely as Soul Blazer had been to her. If she had attempted to play the game and I had responded by denying her access to the system on which to play it, the end result would have been the Super Nintendo being taken from me.  
Except everyone involved knows it wasn't a gift. Young Sandifer and mama Sandifer are both aware control continues to rest with mama Sandifer. 

It was a pretend gift. 

The rules of private property were ones that could only be used against me, as opposed to by me.
It is difficult not to see, in this, the seeds of later politics [...] my version of this resentment was directed outwards at the ruling class. Such are the engines of history.
It's not property's fault that his parents were part of a culture that lies about its gifts to its kids. And not his parents' fault they can't resist their enculturation. These lies do reliably lead to discrediting what the lies are about, though. 

Notably these lies were started, as far as I'm aware, by authoritarian right-culture parents, not left-culture parents. Left-cultural opposition to authority is hypocritical, so they find the lies useful. They especially like the part where we pretend everyone can equally own property. Not coincidentally, the result is semi-true believing socialists. 

Conditional gifts are not contrary to property rights, but the conditions need to be stated explicitly. In a sense, Sandifer clearly knew the conditions anyway, so they went without saying, but just as clearly we can see this leads to pathological thinking in the child, which, left untreated, leads to pathological adults. He attributes the wrongness of the informal/formal breach to property per se. He doesn't consciously recognize informal property as property, because as a child it was only the formal system that was called property. 

If you're not willing to explicitly state the conditions to your child's face, then you should be even more unwilling to enforce those conditions; it's a reliable sign that doing so is contrary to your explicit values. Most of the rest is knowing the kids will object to the conditions and having no answer to those objections.

If you feel the need to fool your kids with hypocritical rules, then at least don't wonder where all your authority went come adolescence.

or perhaps just seeds of a chronic inability to let things go.
Thing is these lies tend not to be one-off. If it was just the SNES, then it sounds like a grudge. However, this wink/nudge system would likely have extended to everything. It would be more surprising if it didn't have a negative effect.

Though more precisely, it was a gift in a sense that the SNES was bought knowing young Sandifer would be the primary beneficiary. Young Sandifer clearly didn't know this, and it's likely Sandifers senior would be unable to articulate it if asked. The correct words are roughly, "This is mine, but I bought it for you, enjoy." Though there is an issue where kids will start thinking it's theirs by adverse possession if the parent never use it themselves.

Wednesday, April 13, 2016

Hypothetical Unified Theory of Cuckservatism

Proggies are post-theist Christians, meaning they have an all-important axis of good/evil, but don't want to admit they believe in good/evil - they're apparently-nihilist crypto-moralists. Thus it was mapped to politics, namely left/right.

I'm not exactly the first to note that s/Satan/Hitler/g. Hagiographic Hitler defines 100% rightism.

But what does this mean for Republicants? They don't deny they're on the right - that they're like Hitler. Hence their continuing defeats. Vote for not-evil, duh.

But why not? Why would anyone willingly admit/imply they're Hitleresque, at least less un-Satanic than their enemies?

This ties into a seemingly separate question: why do Republicants accept such a tiny fraction of the monetary rewards that Demobrats get? Why not convert to Demobracy?

The answer is guilt. They feel particularly holy when flagellated. Republicants, fundamentally, think they win in the next life by abasing themselves in this life. They loudly admit their wickedness so as to demand to be punished for it. Demobrats are delighted to self-righteously provide the shaming they so crave.

This is also why Republicants are so ashamed of their voters, and so tentative when they do gain office. Their voters vote for them unironically! Such sin!

Also ties into 'no enemies to the left.' Obviously, someone gooder than you isn't your enemy, and everyone more sinful than you is to be despised. If the gooder ones decide to throw you under a bus, well that can't possibly be from self-interest, it must be for the greater good.

When Walker Bush wins an election, it's as a slave running against his master. "Oh master, you have become decadent. Reflect on your failings and return to nobility." And the master reflected, summoning from within himself Obama. There was much rejoicing, and Populi saw it was Left. Not only POTUS, but the voters would be redeemed from sin rightism.

But now Trump's here to ruin the game.

Monday, April 11, 2016

Social Justice War, Very Short History

Some free-wheeling folk converge on Tumblr, and start calling themselves warriors for social justice.
This spills beyond Tumbr.

Their behaviour, though effective, is so abhorrent that SJW immediately becomes a term of abuse.

SJWs try to backpedal from the name and get on the euphemism treadmill, but their antics keep them in the spotlight, so nobody forgets. They can't help themselves. They constantly deny that they use the tactics they in fact use, but can't even coordinate enough to produce a lull to let the backlash subside a bit.

Vox Day instigates a list naming SJWs as SJWs, where inclusion requires they perform the kind of actions they openly call for.

Social Justice Warriors initiate plan: losing their minds.

Sophists everywhere are terrified of anyone calling a spade a spade. Their tactics are effective in the short term.

Sunday, April 10, 2016

What Reality Is

What is is-ness per se?
He has argued that we must decouple what we observe from whatever underlying reality may be generating those observations. In other words, there are (at least) two levels of reality: One consists of the rules and regularities of the physical world, which science can access and measure. But the other level, the ultimate source of those rules and regulations, science can never even access, much less come to know.
Delightfully succinct. (Via.) I remember when I used to think the same thing.

Problem: the 'underlying' reality is Russel's teapot. If science cannot access it, then it cannot be accessed. Its properties cannot be described, and it does not affect predictions. It does not, in fact, exist. While there is clearly a metaphorical external world, some objective truths that don't go away if ye stop believing in them, it is not at all clear that there's a literal external world. The solution to Kant's noumenon/phenomenon split is to remove the noumenon, leaving only curiously consistent phenomena.

There is no underlying reality. The observations constitute reality. If they arise from anything, they arise from each other.

To digress, it is possible to observe a multiverse via logic. Scientists are thinking there is one because they believe it's logically necessary from the rules they've observed. This isn't genuinely good enough, because there are still alternatives. Rather it's the well-known scentific bonus arrogance about whatever model happens to be in fashion.